Softness in Indian Market a Concern: Ford Motor

CNBC's Kaori Enjoji speaks to David Schoch, President of Ford's Asia-Pacific operations about the U.S auto giant's growth outlook at the Shanghai Auto Show.

The decline in the Indian auto industry is a concern for one of the world's largest automakers Ford Motor Company, the firm told CNBC at the Auto Shanghai Summit 2013.

"The softness in the Indian market right now is a little bit of a concern," said president of Asia Pacific operations David Schoch on the sidelines of the auto show.

India is one of the American automaker's key regions, as the firm expects 70 percent of its growth over the next decade to come from Asia Pacific and Africa. However, Ford's sales in India dropped 38 percent year-on-year in March due to challenging market conditions including hikes in fuel prices, ongoing high interest rates and high inflation.

"Like China, India has tremendous growth opportunity but all markets will tend to go through cycles," said Schoch. "But I believe we are at a point in a cycle and we are keeping our focus on the long term vision and opportunities we have in India, so fundamentally our strategy hasn't changed," he added.

The once red-hot Indian auto market softened for the first time in a decade over the past year, as domestic passenger car sales fell 6.7 percent in the year to March 2013 on the previous year when car sales grew by 2.2 percent, according to the Society of Indian Automobile Manufacturers. The decline was a sharp slump on the 30 percent rise in sales seen in 2010-2011.

Ford has a more positive outlook for China, the world's largest auto market, said Schoch. Ford sales in China have been growing fast as the company tries to catch up with bigger players, such as Volkswagen.

The company's sales rose 65 percent year-on-year in China in March, but the automaker still has only a 3 percent market share.

Total vehicle sales in China were 19 million units last year and are expected to surge to 32 million by 2020.

Meghan Reeder | CNBC

Ford Escort Concept unveiled at the Shanghai Auto Show, China.

China reported a weaker than expected gross domestic product (GDP) growth figure for the first quarter of this year at 7.7 percent, down on expectations for 7.9 percent, but Schoch said he was not concerned about slowing growth.

"Our business planning outlook has China growing in the 7.5 percent range.

You talk about a slowdown [in China] but it's all relative. The torrid pace that the economy was growing at, at rates of 10, 11 and 12 percent in years gone by really was not sustainable. Somewhere in the 7.5 percent range is about right," he added.

Last month Ford's CEO Alan Mulally was reported to have criticized Japan's participation in the the U.S.-led free trade pact - the Trans Pacific Partnership (TPP) - arguing that Tokyo needs to open its market to more U.S. cars before signing up.

Schoch reiterated this view to CNBC:

"We support free trade. All we are asking for is we have level playing field in terms of our ability to trade. Right now we believe there are some elements of the TPP that are not level playing field for us. We have raised our concerns and continued to work with government on our position," he said.

The 15th Auto Shanghai Summit kicked off on April 19 and will last through to April 29.

Correction: In an earlier version of the story, we incorrectly stated that Ford sold 19 million cars in China in 2012 and will sell 32 million units by 2020. These figures refer to sale projections by the China Association of Automobile Manufacturers for the overall Chinese auto market, and not for Ford.